Chinese Tech Giant Alibaba Sets $100B AI Revenue Goal Despite Profit Plunge

Alibaba Group announced Thursday it aims to generate over $100 billion in artificial intelligence and cloud computing revenue within five years. The ambitious target comes as the Chinese technology company reported a sharp 67% decline in quarterly profits despite strong cloud business growth.

Chinese technology conglomerate Alibaba Group announced Thursday its ambitious plan to generate more than $100 billion in revenue from artificial intelligence and cloud computing operations within the next five years, banking on surging demand for AI technologies.

The bold revenue target was revealed as the Hangzhou-based company reported quarterly earnings showing a dramatic 67% plunge in profits, despite continued strong performance in its cloud division.

During the three months ending in December, Alibaba posted total revenue of 284.8 billion yuan ($41.4 billion), representing a modest 2% increase compared to the previous year but falling short of Wall Street projections. The company has increasingly pivoted toward cloud computing and artificial intelligence technologies in recent years.

Cloud computing revenue surged 36% during the quarter, reaching 43.3 billion yuan ($6.2 billion) compared to the same period last year.

During Thursday’s earnings conference call, Chief Executive Officer Eddie Wu emphasized that Alibaba is positioned to capitalize on what he described as “exponential growth in AI demand.” The company continues to enhance its primary Qwen AI application and consumer chatbot while offering cloud infrastructure and storage solutions to business clients.

“(There is) enormous and sustained growth momentum of the AI market,” Wu stated.

Quarterly profits totaled 16.3 billion yuan ($2.4 billion), a significant decrease from 48.9 billion yuan during the corresponding quarter in 2023, attributed partly to increased marketing and sales expenditures.

The e-commerce pioneer has faced additional profitability challenges from an ongoing price competition in the food delivery sector over recent months.

To boost profits amid rising operational costs and increasing demand, Alibaba announced Wednesday it would raise prices for certain AI services by up to 34%. The company also introduced its new agentic AI platform called Wukong this week, expanding its commercial customer offerings.

Alibaba’s artificial intelligence strategy faced a setback this month with the departure of Lin Junyang, who led the company’s AI model division Qwen. In 2023, the company committed to investing a minimum of 380 billion yuan ($53 billion) over three years to develop its cloud computing and AI infrastructure.

Chinese technology firms have intensified efforts to compete with American competitors and expand their market presence, particularly following the industry disruption caused by AI startup DeepSeek last year.